Everything’s bigger in Texas, including Meta’s latest El Paso data centre venture and BlackRock’s 80% stake in it.
The project, announced last week, will include an approximate US$2.3 billion contribution of venture land and construction-in-progress assets from Meta.
Funds managed by BlackRock will own 80% interest in the project, and the firm will provide a US$4.9 billion cash contribution.
“A portion of BlackRock’s investment will be funded with proceeds from a $12.5 billion debt financing,” the company added.
Debt will be sold through special purpose vehicle Sopaipilla Investor. Fitch Ratings stated last week that it expects to give the senior secured notes an AA- rating. S&P Global gave the notes an A+ preliminary rating.
“We consider [Sopaipilla’s] credit quality to be close to that of Meta, given the substantial level of risk transfer to Meta during the construction and operations phases. However, the ‘A+’ rating on [Sopaipilla’s’s] debt is one notch lower than our rating on Meta, reflecting the absence of a direct asset pledge,” the agency said.
Sopaipilla is expected to raise a further US$1.3 billion in equity and US$300 million in interest income.
The data centre is expected to go online in 2028.
Meta has seen a US$55 billion increase in notional over the last year, while weighted average spreads have widened by 44.6 basis points.
Meta issued US$30 billion to fund AI and data center costs last October, entering into a similar joint venture with Blue Owl to fund a data centre in Louisiana .
READ MORE: Origination: Meta sold US$30 billion of AI bonds on 30 October
During the company’s Q2 earning call, Meta’s chief financial officer Susan Li said, “These partnerships are really structured in a way that gives us flexibility to evaluate every four years what our ongoing compute needs are.”
“We still anticipate investing significantly in both owned and leased data center capacity. Over the long term investing in our own data centers gives us sort of more efficiency and control in terms of what capacity delivery looks like. But cloud capacity gives us the ability to bring capacity online rapidly, given that they have pre-staged capacity available.”
BlackRock CEO Larry Fink added, “Companies around the world are looking for long-term strategic partners to help develop their most important projects, and BlackRock is built to meet that need.”
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